a16z Podcast - a16z Podcast: Gateway Gadgets to the Internet of Things

Episode Date: December 13, 2014

The Internet of Things puts intelligence into all kinds of things -- especially in the home, from appliances to light bulbs and door locks. But we still have a ways to go. “We need to be very patient in this category,” says Quirky CEO Ben Kaufman in a conversation with a16z General Partner Scott Weiss. The technology is available, Kaufman adds, we just need our things -- and habits -- to be ready too. So when does this technology go mainstream? What gadget do they think will push it over the edge ... and what might hold it back even longer? The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. I'm Scott Weiss, a general partner here at Andresen Horowitz, and I'm here with Ben Kaufman, the CEO of Quirky. Topic today is the connected home and internet of things. And just wanted to kick that off a little bit with, you know, I think Chris Anderson had this great quote of the, who left his job at Wired to go chase a drone company. And the quote was, hey, you know, I'm taking advantage of the piece of it end from the cell phone wars. You know, I think drones, toys, and many of the connected home products have benefited from these, you know, the preponderance of sensors and,

you know, cheap batteries and cheap processors, and so now we're sticking them into just about everything. In fact, you know, I saw a moisture sensor on a dog bowl the other day, and I wondered, you know, have we gone too far? And so, Ben, you know, your company has, you know, developed a number of connected home products, and I wonder if you could just kind of, you know, kind of lay out the landscape a little bit as you see it, and we can go back and forth from there. Sure, yeah, we jumped into this about 18 months, so 24 months ago. Not necessarily sure what we were jumping into, but what we saw were a community invention site, so we saw about 24% of community ideas being products that have radios built inside them,

and we knew we needed something about it. We kicked off a partnership with GE and attempted to build products in the space, but also start thinking about a platform that was truly, you know, customer-friendly. Yeah, I think one of the problems is that everybody had their own app, and it's not like you're going to have a kind of a separate garage door app or a separate, you know, kind of oven app. It would be great if these things kind of worked in concert. Have you found that there's kind of, you know, natural product families when you think

about the connected home, like the security app that does four or five things or the, you know, the lighting app? like how do you think about how to group the various products and and you know like maybe give you some indication of which ones you think are you know kind of slam dunks and which are kind of you know we're still in and you know debating about and other ones that are you know kind of have failed and why just want to kind of get talking about it yeah I mean it's it's actually a really hard retail and merchandising problem because on one hand no one walks into a retail store and says I want to buy a connected home instead they go in and they say I want to

I want to service that, or I want a light bulb, and they buy, you know, they wind up with a connection to own one product at a time. So on that side of the coin, it does make sense to have a lot of disparate apps because it's just a much easier story to tell. On the flip side, though, as soon as someone accumulates, we think around three of these products, they're going to be looking for these products to talk to each other, to work together, and to be a bit more harmonious. And, you know, if we look at the data we're getting through our platform, Wink,

Really what you're seeing is the gateway to the connected home is light bolts. It seems like the first thing everyone's buying is bulbs. Either light bulbs and fixtures or actual light switches. But the thing that people most want to do, I think, is take control of their lighting. From there, they might go into HVAC and thermostats and stuff like that. But lighting feels like the easiest thing for people to understand, hey, you don't have to get up off your couch and turn the lights off. so so there's a you know it's interesting that you say lighting i i sat down at dinner with somebody who is like uh has the connected home of the future it looked like really like in fact they had a wink hub

and they had connected at least like i think he connected at least 10 products to the wink hub it's like definitely like into the jetsons type of type of use case and some of the use cases were these recipes or i think you guys call them robots where um you know like maybe his his up uh can tell when he goes to sleep and when he wakes up. And that was kind of a recipe for, you know, when he goes to sleep, make sure the garage door closes, make sure the oven's off, make sure all the lights are off. And when he wakes up, like the downstairs lighting automatically goes on. Do you think that that kind of use case is going to be, you know, kind of a normal, like for normals where they're actually going to set up recipes and robots to do all these crazy things?

or, you know, how do you envision the people interfacing with the connected home? I think you have nerdy, Fred. I think that the reality of it is, you know, I don't think the average user in the middle of the country is going to be setting up robots or recipes or whatever techie word we put on it. What's going to happen, though, is, you know, we can start to get really smart, right? So if we see that you have motion sensors and light bulbs, we know that, by chance, what you would probably want to do is when you walk into a room, have the lights go on,

and when you walk off, have them off. You know, you are more than 100 feet away from your house. Chances are you want your garage door closed. So I think what you're going to see is things that we are right now setting up ourselves and calling recipes or calling robots are going to become things that are programmatically sort of learned with, you know, the human behavior that normally goes along with collections of product. Got it. So the motion detector for being in the room seems like an easy one. You know, the garage door opener we talk a lot about because it, you know, like it's one of those

niggling things of, I've left the house and did I open it? Was it closed? What have you? But I, you know, like, what about the unintended consequences of some of these things? Like, you know, I don't know that I always, when I walk into a room I want the light to go on. Like, what if my wife's sleeping there? And, you know, certainly like the garage door is one of those things that, you know, people are now using it to, like, did my spouse leave the house yet? You know, like there's this, this data could have, both the functionality and the data could have some unintended consequences, both positive and negative, right? Yeah, I mean, it all comes down to how much you believe in the future, I guess.

You know, like, there are technological solutions to every single problem you brought up, right? With everyone's phone being a beacon and everyone's phone having activity trackers, you will know whether or not someone is sleeping or someone's awake. I mean, you can start to imagine a future where all this stuff actually takes care of itself, or you can just say, hey, these solutions have worked forever. Let's not over,

sort of complicate our homes. I think the answer of where we wind up is somewhere in the middle. You know, 70% of people enter their homes through their garage. Chances are they're going to want some assurances around whether or not their garage is

open or closed and want to be able provide temporary keys to, you know, caregivers or service providers. So, you know, again, I don't necessarily personally believe in the far extreme, but I also don't think that the current solutions of, you know, light switches that were invented in 1908 are, you know, state-of-the-art and are incapable of being better. But let's talk about lighting just for a second. I mean, if you were to think about the two or three use cases for lighting, One is, you know, obviously, you know, turning the lights off on a more consistent basis.

You know, think about just like in Europe where everybody is much more energy conscious, and, you know, you have to physically leave a key in the light at most hotel rooms in the switch so that the power just immediately shuts off to everything when you're not in the room, you know, forces me to occasionally get two keys, so I'm not inconvenienced by my heater going off. But I just, one of the things that I think people miss in the lighting and kind of the sensing is just how much energy is going to be saved. And I know that you have an air conditioner that's, that's, quote, smart. And one of the key features is this issue of saving, you know, saving the time that it's on for only when you're actually physically either there or on your way there to cool down the, to cool down the place. So, you know, I guess how much of this is convenience versus how much is, you know, kind of, we need to start saving electricity and other things, and, you know, like, how would you, how would you parse that? Yeah, it's really interesting. I mean, I think a small part of it is the lazy factor of just, you know, not having to get up off the couch.

But I think people are actually starting to really see, you know, the benefits of the energy-saving parts of ecosystems like this. I mean, when your light bulbs last 22.3 years, you're a lot less worried about, you know, how often you have to change the bulbs and a lot more worried about what these bulbs look like. And will they, you know, fit the changes in decor I have, you know, plan for my home and so on and so forth? I think, you know, I think California is leading the way in a lot of this. We're building a small office out there, and there's a new California law that says all offices that are being built need to have light sensors and motion sensors in every single room,

and if a room's not being used, the lights need to be off or at least dim to a certain level, and there's all sorts of energy usage guidelines. We actually used it for a test bed for our products to see if, you know, our products which were designed for the residential world can sort of live up to the commercial code and actually, you know, meet all of these energy requirements. It turns out they do. And so you start to normally have, you know, energy savings on the product level,

but in places like offices and commercial uses where you would normally have to buy expensive system like a crest runner, a lutron, if you can implement residential systems like a wink, you're also going to save money on the hardware as well. So I think all these things are starting to really click in people's minds. It's going to take a while, though, and I've said we need to be very patient in this category. Right. So what is the – if some people are out there listening and wondering, you know, kind of what's the closest thing to the Jetsons as far as the products that you're seeing coming

down the pipeline. You know, when I think about the Jetsons and the robots and the, you know, like I push a button and out comes my scrambled eggs and bacon and some coffee, like I have a coffee machine at home. You know, I have to clean the damn the milk thing out twice a day. But like, how close to the Jetsons are we? And like, what do you see products around the corner that would give me kind of a Jetson-esque feel? Yeah, I think we have a little ways to go in the appliance world. There isn't, there aren't self-cleaning, uh, uh, uh, appliance. is outside of, obviously, self-cleaning oven that exists. There's no laundry folding robot or anything like that.

But there are some really cool solutions coming out there on countertop appliances. You know, we actually, at Corgi, Oregon, a really cool product called a, it's an infant formula machine. So if you have a young baby and a baby starts crying in the middle of the night, you hit a button, and it actually takes the powdered infant formula. It mixes it with pasteurized. water, it spins the bottle, mixes it all up, and then brings it down to perfect drinking temperature. That seems just an X to me, and I think it'll help, it'll help mom.

Absolutely. Do you put it in the crib and they drink it like a gerbil, or how does it actually work? Actually, that's a great little... It should be a little aftermarket item, right? Like, you can put it right in the crib, and it makes it up and stuffs it right in their mouth. You don't even have to wake up. Listen, I, the jury for me is still out a little bit on exactly how everything's going to be applied, but, you know, I, I see the cost savings. I see the convenience savings. You know, one of the things that I've been continually intrigued by is the locks. Like, I think locks and the fact that we're still carrying around keys seems to be a very, very antiquated, you know, way of doing things. And I think about share of pocket. If my, if my phone, which is,

is, you know, kind of has my fingerprint, can let me in to any door that I have access. You also have kind of a cloud access control associated with locks. So when I think about, like, the, the place of the future, you know, like, let's say the house of the future, locks to me seem to be like a pretty seminal thing. Like, I know you mentioned lighting, but just the fact that everybody has, you know, certain access control. Nobody has to carry around keys. They just carry their cell phone. And they kind of walk in and out of the doors by putting their finger on the, you know, kind of the fingerprint scanner. And then, of course, you have this cloud service where you can go and see all the

comings and goings of, you know, a nanny, a house cleaner, a babysitter, a repair person. If I were to handicap, like what I would like to see in the next five years on Internet of things, I think locks would be my number one. Yeah, locks are going to be a big one. What you have to think about is, are we going to see sort of same lock and key type type things with radios inside of them and then the cloud software that goes along with it or is it going to be sort of one step ahead of that where there is no actual physical lock on the door all the hardware is built into the door itself and instead you just have you know your decor handles and

things like this um i think you're going to wind up with locks are invisible um and that's where it gets interesting for me yeah you know it's funny when i think about um uh retail technologies that have been transformative like, you know, the ATM was one that just kind of saved so much money on both sides and time for people going to bank tellers or the pay at the pump was another thing that was, you know, just a transformative retail technology. You know, being able to just kind of walk into a hotel and right to my room in the same way that I claim my car over at, you know, kind of like at the, at Hertz Gold, feels like something that could, you know, kind of be a transformative retail technology for for hotels you know just being able to kind of send me

my key and preordain my my hotel room so when I get there there's no standing in line I just walk right to the room and you know either my I have a code or what have you just lets me right in the door yeah I think that'd be awesome I mean you just the problem with all these technologies the technology exists and really the period we're in right now is a period of waiting for everyone to adopt the technology and and go through the cycles of building new hotels or changing out the doors and in the 500,000 hotel rooms that Marriott manages in the United States. All these different things are, you know, we're ready for it. It's just a matter of letting it absorb and happen. Right. Well, hey, Ben, I don't want to take any more time.

Thanks so much for joining us today and take care. Thank you, Mr. Wise.